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Competitive Strategy
Gain Market Shares
வி�னை� விலியும் தன் விலியும் மா�ற்றா�ன் விலியும் துனை� விலியும் தூக்கி�ச்செ�யல் - Thirukkural 471
Before undertaking any task, weigh judiciously (1) the nature of the task on hand, (2) your own strength, (3) Competitor's strength and (4) the strength of your support team, allies and partners.
Lets look at…
• Process of formulation
• Frame work for analysis
• Principles to GAIN…
Source: Competitive Strategy – Michael Porter Marketing War-Fare – Al Ries & Jack Trout
Formulation…
• Situation Analysis– The business we are doing
• Current Implicit and explicit strategy?
– Implied Assumptions• Relative position• Strengths• Weakness• Competitors• Industry Trends
Formulation…
– Environment Scan• KSFs of Competition• Opportunity & Threats• Capabilities of existing competition• Capabilities of potential entrants• Probable strategic moves of competition• Government, social and political factors• Relative strength compared to current and future
competition
Formulation…
– What Should we be doing?• Test assumptions and Strategy for
– Internal consistency» Goals achievable?» Do internal policies address and reinforce Goals?
– Environmental Fit» Goals and Policies exploit Opps ,Threats and timing?
– Resource Fit» Goals and Policies match resources available and
timing?
Formulation…
– Communication and Implementation» Goals & Policies are understood?» Is there congruence between Goals & Policies?» Managerial talent avaliability
Formulation…
– Strategic Alternatives• Arrive (As) Basis the analysis made• Compare existing against the backdrop of this
analysis
– Strategic Choice• Determine the best alternative that best fits • And has the ability to leverage Opps and Threats
Framework
Porter’s 5 Forces
New Market Entrants, eg:Geographical factorsEntry ease BarriersIncumbents resistanceNew entrant strategyRoutes to market
Competitive Rivalry, eg:Industry size and trendsNumber and size of fimsFixed v variable cost basesProduct/service rangesDifferentiation, strategy
Product and Technology Development, eg:Market distribution changesAlternatives price / qualityFashion and trendsLegislative effects
Supplier Power, eg:Geographical coverageBrand ReputationProduct/service level qualityRelationships with customersBidding processes/capabilities
Buyer Power, eg:Buyers size/numberBuyer ChoiceChange cost/frequencyProduct/service importanceVolumes, JIT scheduling
Threat Of
New Entrants
Bargaining Power
of Buyers
Threat of
Substitute products
Bargaining Power
of Suppliers
Rivalry among existing Firms
Three Generic Strategies…
Differentiation Overall Cost Leadership
FOCUSParticular Segment
only
Low Cost positioning
Uniqueness perceived
by customer
Industry Wide
Competitor’s Response ProfileIs the Competitor satisfied with the current position?What likely moves of strategy shifts will they make?Where is the Competitor vulnerable?What will provoke the greatest and most effective retaliation by them?
Current Strategy
How is the BusinessCurrently
Competing
Capabilities
Strengths &
Weakness
Assumptions
Held aboutitself
and the Industry
Future Goals
At all levels ofManagement
&Other
Dimensions
Principles to Gain
War-Fare
The Strategic Square…
• There is no one way to Gain
• There are 4 ways to Compete…
Competition
Flanking Guerrilla
OffensiveDefensive
Defensive…
• Only the market leader should consider playing defense
• The best defensive strategy is the courage to attack yourself
• Strong competitive moves should always be blocked
Offensive
• The main consideration is the strength of the Leader’s position
• Find a weakness in the Leader’s strength and attack at that point
• Launch the attack on as narrow a front as possible
Flanking…
• A good flanking move must be made into an uncontested area
• Tactical surprise ought to be an important element of the plan
• The pursuit is just critical as the attack itself
Guerrilla…
• Find the segment of the market small enough to defend
• No matter how successful you become, never act like the leader
• Be prepared to bug out at a moments notice
Out of every
100 companies
as a glittering generality,
1 should play Defense,
2 should play Offense,
3 should play Flank
&
94 should be Guerrillas!
த�ர்த�ங்கி�ச் செ�ல்விது த�னை� தனை�விந்தபோ��ர்த�ங்கும் தன்னைமா அறா"ந்து. – Thirukkural 767
"Well trained armed forces will withstand every offense then outflank and storm the foe"